A special envoy for Central Asia from the Organization for Security and Co-operation in Europe says there is a major lack of confidence of the people in state institutions in Kyrgyzstan, despite recent improvements.

OSCE official Alojz Peterle has just returned from Bishkek where he met the president, deputy prime ministers, the foreign minister, leaders of political parties, and representatives of civil society.

Mr. Peterle told the OSCE Council the country is facing poverty, high unemployment, corruption, and a lack of law and order that could lead to intolerance. He said the overall situation improved after parliament approved President Akaev's resignation and decided to hold presidential elections on July 10.

But he says the election campaign is taking place under unfavorable conditions that mean it is difficult for the government to introduce essential reforms that could be unpopular.

Mr. Peterle recalled the security problem that developed on the night of the revolution.

"Complete absence of state power, no police no army, nobody to be seen on the streets," he said. "The OSCE did propose a police assistance program and the country is facing now the need to re-establish security forces and I think this program is even more needed than before."

Mr. Peterle says the upcoming elections must be seen to be free and fair and voters must be able to check lists to avoid charges of manipulation that surrounded the recent parliamentary election.

"There were many protests expressed because people were not able to vote, were not on the lists, voter lists and on the other side it was reported some people had the chance to vote many times so its one of the major challenges to be very transparent with that," he said.

The OSCE is expected to send election observers to Kyrgyzstan to monitor the election process.

A senior Russian diplomat told reporters outside the Council meeting there could be no stability or security in the Central Asian republic, once part of the Soviet Union, without economic development. Both Russia and the United States belong to the OSCE which has recently played a major role in publicizing electoral fraud in Georgia and the Ukraine.